The United States of America v Nolan

Domestic legislation which implements an EU directive may extend beyond the directive where Parliament intended a wider domestic regime. The duty to interpret implementing legislation consistently with EU law does not require courts to reproduce an exclusion from the directive.

Clear employment legislation governing employees, contracts and dismissals within Great Britain applies to a foreign state even where the redundancy resulted from a sovereign decision taken abroad. State immunity concerns whether a claim may be adjudicated. It does not determine whether the substantive law applies.

Although section 2(2) of the European Communities Act 1972 requires an objective and close relationship with an EU obligation or right, subordinate legislation may preserve a relationship already established by a unified regime enacted by Parliament.

The United States decided to close an Army watercraft repair centre in Hampshire. Mrs Nolan, a civilian employee dismissed for redundancy, alleged that it had failed to consult employee representatives under section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992. State immunity was not pleaded in time.

The Employment Tribunal upheld the complaint and the Employment Appeal Tribunal affirmed its decision. Following a reference from the Court of Appeal, the Court of Justice held that dismissal of staff at a military base fell outside Council Directive 98/59/EC and declined jurisdiction over the consultation question. The Court of Appeal subsequently dismissed the United States' appeal: [2014] EWCA Civ 71; [2014] ICR 685.

The Supreme Court considered whether the domestic legislation excluded sovereign acts of foreign states, whether international law required such an exclusion, and whether the 1995 amending Regulations exceeded section 2(2) of the European Communities Act 1972.

1. Appeal dismissed by a majority of four to one. Lord Mance, with whom Lord Neuberger, Lady Hale and Lord Reed agreed, held that Part IV Chapter II of the Trade Union and Labour Relations (Consolidation) Act 1992 contained no implied exclusion for public administrative bodies generally or for sovereign acts of foreign states. Parliament had enacted specific exclusions for Crown employment, the armed forces, police service and certain other public employment. Their specificity demonstrated that the remaining public employment was deliberately included.

2. The principle of conforming interpretation did not require the domestic scheme to reproduce article 1(2)(b) of Council Directive 98/59/EC. A directive may permit national law to give workers greater protection or to regulate areas beyond EU competence. The domestic history and structure showed that the statutory scheme was not intended to be merely back-to-back with the Directive. Risk Management Partners was distinguishable on that issue.

3. International law did not require an implied exemption for a foreign state's jure imperii decisions. The legislation regulated consultation with employees working under domestic contracts at an establishment in England. It therefore exercised territorial jurisdiction, even though the strategic closure decision was made abroad.

4. Legislative jurisdiction and state immunity were distinct. Immunity bars adjudication in the forum court but does not remove the underlying substantive law or liability. Reading all legislation as inapplicable whenever a foreign state could have claimed immunity would improperly collapse those doctrines and make immunity procedures largely redundant.

5. EU nationality protections did not assist the United States. The dispute arose in an area expressly excluded from EU law, and a non-member state was not protected by the EU prohibition against nationality discrimination.

6. Section 2(2) of the European Communities Act 1972 authorises implementation and provisions objectively and closely related to EU obligations or rights. It ordinarily does not authorise extension of an internal-market regime into areas outside EU competence merely because that is convenient domestic policy. Here, however, Parliament had already created a unified primary-legislation regime covering both EU and excluded public employment. The executive could preserve that pre-existing relationship when the 1995 Regulations corrected the regime's failure to protect employees without recognised union representation.

7. The matter was remitted to the Court of Appeal to determine, so far as necessary, when the consultation obligation arose under the unresolved UK Coal/Fujitsu issue.

Lord Carnwath dissented only on vires. He considered that the extension to public administrative bodies derived solely from domestic policy and lacked the relationship with EU law required by section 2(2)(b). He would have allowed the appeal on that ground while dismissing the construction grounds.

1. United Kingdom Supreme Court: By a majority of four to one, dismissed the appeal on all three grounds and affirmed the courts below. The unresolved consultation issue was remitted to the Court of Appeal.

2. Court of Appeal: Dismissed the appeal in [2014] EWCA Civ 71; [2014] ICR 685, and ordered a further hearing on the UK Coal/Fujitsu issue.

3. Court of Justice: In Case C-583/10, [2013] ICR 193, held that the dismissal fell outside Council Directive 98/59/EC and declined jurisdiction over the referred question.

4. Court of Appeal: In [2010] EWCA Civ 1223, referred to the Court of Justice the question when collective consultation must begin.

5. Employment Appeal Tribunal: On 15 May 2009 upheld the Employment Tribunal's order.

6. Employment Tribunal: On 17 March 2008 upheld the complaint and awarded remuneration for a one-month protected period.